A Replacement for the Patent System

Patents as originally setup were a deal between a government and
someone who had a good idea. The person with a good idea would get a
patent providing him with the right to make a profit on all use of the
idea for some period of time and, in return, make the idea available
for others to use. Very significant changes have occurred since the
inception of the idea with all of these changes making the basic deal
favor the patenter over society.

The pace of innovation has dramatically increased to a time scale as
short as 1 year. Patents, with a fixed time scale of 17 years are now
a radically better deal for the patenter because the next 10 or so
generations of technology which build upon a patented idea must pay
homage to the original patent owner. Consequently, new technology now
tends to be heavily encumbered with multiple patents to which
licensing fees must be paid creating an administrative nightmare as
well as possible monopolistic choke points on each patent.

The standards of what is a patentable idea have also steadily relaxed.
Software patents were originally rejected but now are commonplace.
Business process patents are another new variety which have
significant implications. The issue of "stupid patents" has become
especially bad in both of these new areas where many patents are made
based upon the kind of original thinking that would be expected of a
competent software designer who thought about the problem for a few
minutes. Examples include a patent on "windowing" to avoid the y2k
bug and a patent for the process of sending audio data over the
internet. Many others exist and have been detailed elsewhere.

The latest form of patent is on a business process itself. If you
regard a company as a machine, the patent office now excepts patents
on pieces of this machine. It is difficult to imagine such patents
having any value for society at large and easy to imagine destructive
potential in these patents. Business process patents are often not
licensed for use by other companies, but are instead kept by the
company for its own (exclusive) use. The consequence is that every
other company is forced to perform in inefficient ways which do not
copy the patent. One example of this is the Amazon patent on "One
Click Shopping". The basic idea is to make it very easy for customers
to buy items over the web and the means is trivial. How does it give
society any benefit to give an exclusive monopoly on "One Click
Shopping" for 17 years? It doesn't.

We are stuck in a conundrum. The idea of compensating people for good
ideas is a good idea because people tend to be very self-motivated in
general and it is best for society to harness this motivation for the
improvement of society. However, the current system is inflexible,
poorly managed, inefficient and appears to have entirely lost sight of
the fundamental deal which society made in creation of the patent
system.

Inflexibilty: 17 year patents at a minimum granting essentially all
right to the patent holder. The inflexibility could easily be
improved by passing a law making the terms of a patent more
negotiable.

Poorly managed: As evidenced by the preponderance of stupid patents.
With the cost of a patent application in the $10000 range it is pretty
clear that a nontrivial amount of income for the patent office is
generated in patent application fees. It is unsurprising to learn
that the patent office has been succesfully encouraging patent
applications by gradual degradation of patent standards and widening
of scope. The fix for this problem is more difficult. Fundamentally,
patent granters need to be motivated on the behalf of society in order
to conduct a meaningful negotation over granted patent rights. While
general improvement of society may be of some concern to the
negotiators, a more direct system of reinforcement is likely to be
useful. Lacking any better idea, I would propose a patent tracking
office which tracks and attempts to predict the impact on society of
granted patents over time. The original patent negotiators can then
recieve bonuses based upon the "performance" of their patent
negotiations. While this is a difficult task, it is also rewarding in
its own right because better knowledge of the impact of patents on
society would aid in conducting patent negotiations.

Inefficient: Legal enforcement of patents and negotiation are a very
significant burden on patent holders. This problem is fundamental to
the way patents work. There is a very unsettling nonlocality to the
patent system. If Jim gets a patent then Jill can not legally use the
idea without paying Jim royalties. Even if Jill never heard of Jim's
patent and developed the idea on her own this is true. Indeed, the
number of patents is now so large that it is now difficult to know if
you are violating a patent. Further complicating the matter are court
cases which suggest that only a patent lawyer is qualified to
determine whether a patent is in violation. It is remarkably
inefficient for all parties to bear the burden of this nonlocality and
legal maneuverings. Correcting this problem is not simple because it
is built into the way patents are done. If instead of granting
exclusive rights the government does upfront payments on the behalf of
society to ideamakers these inefficiency issues may be avoided.

So, in total the proposal is to increase the negotiation flexibility
available to the patent office, create a seperate patent impact
oversight office with which to determine the impact on society of
patent grants, use the patent impact studies to provide bonuses to
good patent negotiators and to replace the standard monopoly style
patent with direct compensation.